Exhibit 4.5

                               DEBENTURE AGREEMENT

THE  SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN  RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.  THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR  RESOLD  EXCEPT  AS  PERMITTED  UNDER  SUCH LAWS PURSUANT TO
REGISTRATION  OR  AN EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS  OF  THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY  REPRESENTATION  TO  THE  CONTRARY  IS  UNLAWFUL.

FACE  AMOUNT                                       $168,000
PRICE                                              $140,000
DEBENTURE  NUMBER                                  May  -  2006-103
ISSUANCE  DATE                                     May  24,  2006
MATURITY  DATE                                     May  24,  2011

     FOR  VALUE  RECEIVED,  Xtreme  Companies,  Inc.,  a Nevada corporation (the
"Company"),  hereby  promises to pay DUTCHESS PRIVATE EQUITIES FUND, II, LP (the
"Holder")  by  May  24,  2011 (the "Maturity Date"), the principal amount of ONE
HUNDRED  AND  SIXTY-EIGHT  THOUSAND Dollars ($168,000) U.S., and to pay interest
and  redemption  on  the  principal amount hereof, and any accrued penalties, in
such  amounts,  at  such times and on such terms and conditions as are specified
herein.

     The  Debenture  set  forth  in  this  Agreement  is  subject  to  automatic
conversion  at the end of five (5) years from the date of issuance at which time
the Debenture outstanding will be automatically converted based upon the formula
set  forth  in  Section  3.2  (c).

Article  1     Interest

     The  Company  shall  pay ten percent (10%) annual coupon on the unpaid Face
Amount of this Debenture (this "Debenture") at such times and in such amounts as
determined  by  the Holder.  The Holder shall have the right to request interest
payments  on  the  Face  Amount anytime after closing and each month thereafter.
The  Holder  shall  submit  to  the Company a notice requesting a payment in the
amount  equal  to  the  interest  accruing  for that month on the balance of the
Debenture.  The  Interest  shall  be  compounded  daily.

     Any monies paid to the Holder in excess of the interest due when paid shall
be  credited  toward  the  Redemption  of  the  Face  Amount  of  the Debenture.

Article  2     Method  of  Payment

Section  2.1     Cash  Payments

     If  requested  by  the Holder, the Company will make amortizing payments to
the  Holder (a "Payment," or collectively, the "Payments") on a monthly basis on
the  first  day of each business day of each month while there is an outstanding
balance  on  the  Debenture, in an amount to be determined by the Holder and the
Company  based  on  the  Company's  then  current financial position.  ("Payment
Amount" or collectively, the "Payment Amounts").  In no event, shall the Payment
be  less than the Interest accruing on the outstanding balance of the Debenture.

Notwithstanding any provision to the contrary in this Debenture, the Company may
pay  in full to the Holder the Face Amount, or any balance remaining thereon, in
readily  available  funds,  at  any  time and from time to time without penalty.

     Section  2.2     Conversion  Payments

     The  Holder,  at  its sole option, shall be entitled to either i) request a
Payment from the Company in the amounts set forth in Section 2.1, above; or, ii)
the  Holder  may elect to convert a portion of the Debenture pursuant to Article
3,  below,  in  an  amount equal to or greater than the Payment Amount.   In the
event the Holder is unable to convert that portion of the debenture equal to the
Payment Amount during a calendar month, the Company shall make a Payment in cash
in  an amount equal to the difference between the amount converted by the Holder
and  the  Payment  Amount  due  for  that  month.

     Nothing  contained  in this Article 2 shall limit the amount the Holder can
elect  to  convert during a calendar month except as defined in Section 3.2 (i),
below.

     All  Payments  made  in  under  Article  2,  shall  be  applied  toward the
Redemption  Amount  as  outlined  in  Article  14,  herein.

     Section  2.3  No  Penalty  for  Prepayment.

The  Company  may  make  additional  payments  toward  Redemption ("Prepayment")
without  any  penalties.

Section  2.4  Accelerated  Repayment in the Event of a Subsequent Financing by a
Third  Party.

If, at any time after Closing, the Company receives financing from a third party
(excluding the Holder), the Company is required to pay to the Holder 100% of the
proceeds  raised  from  the  third  party  in  excess  of an aggregate amount of
$500,000  (the  "Threshold Amount").  The Threshold Amount shall also pertain to
any  assets sold, transferred or disposed of by the Company.  The Company agrees
to pay one hundred percent (100%) of any proceeds raised by the Company over the
Threshold Amount toward the accelerated repayment of the Debenture with Interest
until  such time as the Face Amount of the Debenture has been paid in full.  The
accelerated  Repayment shall be made to the Holder upon the Company's receipt of
the  financing. Failure to do so will result in an Event of Default as set forth
herein.

Article  3     Conversion

     Section  3.1     Conversion  Privilege

     (a)     The  Holder  of  this Debenture shall have the right to convert any
and  all  amounts  owing under this Debenture into shares of Common Stock at any
time following the Closing Date and which is before the close of business on the
Maturity  Date,  except  as  set  forth  in Section 3.2(c) below.  The number of
shares  of  Common  Stock  issuable  upon  the  conversion  of this Debenture is
determined  pursuant to Section 3.2 and rounding the result to the nearest whole
share.

     (b)     This  Debenture  may not be converted, whether in whole or in part,
except  in  accordance  with  this  Article  3.

     (c)     In  the  event  all  or  any  portion  of  this  Debenture  remains
outstanding on the Maturity Date, the unconverted portion of such Debenture will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Section  3.2.

     Section  3.2     Conversion  Procedure

     (a)     Conversion  Procedures.  The  unpaid  Face  Amount  of  and accrued
interest  on  this  Debenture may be converted, in whole or in part, at any time
following  the Closing Date.  Such conversion shall be effectuated by the Holder
sending  to  the  Company  a  facsimile or electronic mail version of the signed
Notice  of  Conversion  which  evidences  the  Holder's intention to convert the
Debenture  indicated.  The  date  on which the Notice of Conversion is delivered
("Conversion  Date")  shall  be  deemed  to  be the date on which the Holder has
delivered  to the Company a facsimile or electronic mail of the signed Notice of
Conversion.  Notwithstanding  the  above,  any  Notice of Conversion received by
5:00  P.M. EST, shall be deemed to have been received the previous business day,
with  receipt  being  via  a  confirmation  of  time of facsimile of the Holder.

     (b)     Common  Stock to be Issued.     Upon the Holder's conversion of any
Debenture, the Company shall issue the number of shares of Common Stock equal to
the  Conversion.  If,  at the time of conversion, the Registration Statement has
ben  declared  effective, the Company shall instruct its transfer agent to issue
stock  certificates without restrictive legend (other than a legend referring to
the  registration  statement  and prospectus delivery requires) or stop transfer
instructions.  If at the time of Holder's conversion, the Registration Statement
has  not  been declared effective, the Company shall instruct the transfer agent
to  issue the certificates with an appropriate legend.  The Company shall act as
Registrar  and  shall  maintain  an  appropriate ledger containing the necessary
information  with  respect  to  each  Debenture.  The  Company  warrants that no
instructions, other than these instructions, have been given or will be given to
the  transfer  agent and that the Common Stock shall otherwise be freely resold,
except  as  may  be  otherwise  set  forth  herein.

     (c)     Conversion  Price.  Holder  is  entitled to convert the unpaid Face
Amount  of  this  Debenture, plus accrued interest, any time following a Closing
Date,  at  the  lesser  of (i) 75% of the lowest closing bid price of the Common
Stock  for  the  fifteen  trading  day period prior to a Conversion; or, (ii) at
eight cents ($.08).  The lower of (i) or (ii) being referred to as a "Conversion
Price".  No  fractional shares or scrip representing fractions of shares will be
issued  on conversion, but the number of shares issuable shall be rounded up, as
the case may be, to the nearest whole share.  The Holder shall retain all rights
of  conversions  during  any  partial  trading  days.

     (d)     Maximum  Interest.  Nothing  contained  in  this Debenture shall be
deemed  to  establish  or require the Company to pay interest to the Holder at a
rate  in  excess  of  the maximum rate permitted by governing law.  In the event
that the rate of interest required to be paid exceeds the maximum rate permitted
by  governing  law, the rate of interest required to be paid thereunder shall be
automatically  reduced to the maximum rate permitted under the governing law and
such  excess,  if so ordered, shall be credited on any remaining balances due to
the  Holder  with  reasonable  promptness  by the Holder to the Company.  In the
event  this  Section  3.2  (d) applies, the Parties agree that the terms of this
Debenture  remain  in  full  force and effect except as is necessary to make the
interest  rate  comply  with  applicable  law.

     (e)     Opinion  Letter.  It  shall be the Company's responsibility to take
all  necessary  actions  and to bear all such costs to issue the Common Stock as
provided  herein,  including  the  responsibility  and  cost  for delivery of an
opinion  letter  to the transfer agent, if so required.  The person or entity in
whose  name the certificate of Common Stock is to be registered shall be treated
as  a  shareholder of record on and after the conversion date. Upon surrender of
any  Debentures that are to be converted in part, the Company shall issue to the
Holder  a  new  Debenture  equal  to  the unconverted amount, if so requested in
writing  by  Holder.

     (f)     Delivery  of  Shares.  Within three (3) business days after receipt
of  the  documentation  referred  to  above in Section 3.2(a), the Company shall
deliver  a  certificate,  in  accordance  with  Section 3.2(c) for the number of
shares  of  Common Stock issuable upon the conversion.  In the event the Company
does  not  make  delivery  of  the Common Stock, as instructed by Holder, within
three  (3)  business  days  after  the Conversion Date, the Company shall pay to
Holder  in cash, as liquidated damages, an additional three percent (3%) per day
of  the  dollar  value  of  the  Debentures  being  converted.

     If  the  failure  of the Company to issue the Common Stock pursuant to this
Section  3.2  (f)  is  due  to the unavailability of authorized shares of Common
Stock,  the  provisions of this Section 3.2 (f) shall not apply, but instead the
provisions  of  Section  3.2  (k)  shall  apply.

              The  Company  shall  make any payments required under this Section
3.2(f)  in  immediately  available funds within three (3) business days from the
date  the  Common  Stock  is  fully  delivered.  Nothing  herein shall limit the
Holder's  right  to  pursue  actual  damages  or  cancel  the conversion for the
Company's  failure  to issue and deliver Common Stock to the Holder within three
(3)  business  days  after  the  Conversion  Date.

     The  Company  shall  at  all  times  reserve  (or  make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock  necessary  to  meet conversion of the Debentures by Holder of the
entire  amount  of  Debentures  then  outstanding.  If,  at any time, the Holder
submits  a  Notice  of  Conversion  and  the  Company  does  not have sufficient
authorized  but unissued shares of Common Stock (or alternative shares of Common
Stock  as  may  be  contributed by Stockholders) available to effect, in full, a
conversion  of  the Debentures (a "Conversion Default", the date of such default
being  referred  to  herein as the "Conversion Default Date"), the Company shall
issue  to the Holder all of the shares of Common Stock which are available.  Any
Convertible  Debentures or any portion thereof, which cannot be converted due to
the  Company's  lack  of  sufficient  authorized  common stock (the "Unconverted
Debentures"), may be deemed null and void upon written notice sent by the Holder
to  the  Company.  The  Company  shall provide notice of such Conversion Default
("Notice  of  Conversion  Default")  to the Holder, by facsimile, within one (1)
business  days  of  such  default.

     In  the event of Conversion Default, the Company will pay to the Holder the
amount of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered  but  not converted Debentures held by each Holder where N = the number
of days from the Conversion Default Date to the date that the Company authorizes
a  sufficient  number  of  shares  of  Common  Stock to effect conversion of all
remaining  Debentures (the "Authorization Date").  The Company shall send notice
to  Holder  of outstanding Debenture that additional shares of Common Stock have
been  authorized;  stating  the  Authorization  Date  and the amount of Holder's
accrued  Conversion  Default  Payments  ("Authorization  Notice").  The  accrued
Conversion  Default  shall  be  paid in cash or shall be convertible into Common
Stock  at  the  Conversion  Rate,  upon written notice sent by the Holder to the
Company,  as  follows:   (i) in the event the Holder elects to take such payment
in  cash,  cash  payment  shall  be made to the Holder  within five (5) business
days,  or  (ii)  in  the  event Holder elects to take such payment in stock, the
Holder  may  convert  at  the conversion rate set forth in the first sentence of
this  paragraph  within  five  (5)  business  days  until  the expiration of the
conversion  period.

     The  Company  acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of  the  Debenture  will  cause  the Holder to suffer irreparable harm, and that
damages  will be difficult to ascertain.  Accordingly, the parties agree that it
is  appropriate to include in this Agreement a provision for liquidated damages.
The  parties  acknowledge  and  agree  that the liquidated damages provision set
forth in this section represents the parties' good faith effort to quantify such
damages  and, as such, agree that the form and amount of such liquidated damages
are  reasonable  and  will  not constitute a penalty.  The payment of liquidated
damages shall not relieve the Company from its obligations to deliver the Common
Stock  pursuant  to the terms of this Debenture.  Nothing herein shall limit the
Holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares  of  Common  Stock.

     If,  by the third (3rd) business day after the Conversion Date, any portion
of  the  shares  of  the  Convertible  Debentures have not been delivered to the
Holder  and  the  Holder  purchases, in an open market transaction or otherwise,
shares  of  Common  Stock  (the "Covering Shares") necessary to make delivery of
shares  which  would  have been delivered if the full amount of the shares to be
converted and delivered to the Holder, then the Company shall pay to the Holder,
in  addition  to  any  other  amounts due to Holder pursuant to this Convertible
Debenture,  and  not  in  lieu thereof, the Buy-In Adjustment Amount (as defined
below).  The  "Buy  In  Adjustment Amount" is the amount equal to the excess, if
any,  of (x) the Holder's total purchase price (including brokerage commissions,
if  any)  for  the  Covering  Shares  over (y) the net proceeds (after brokerage
commissions,  if  any)  received by the Holder from the sale of the Sold Shares.
The  Company shall pay the Buy-In Adjustment Amount to the Holder in immediately
available  funds  within five (5) business days of written demand by the Holder.
By  way  of  illustration  and not in limitation of the foregoing, if the Holder
purchases  shares  of  Common  Stock  having  a  total purchase price (including
brokerage  commissions)  of  $11,000 to cover a Buy-In with respect to shares of
Common  Stock  it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which  the  Company  will  be  required  to  pay  to  the Holder will be $1,000.

     (g)     Prospectus and Other Documents. The Company shall furnish to Holder
such  number  of prospectuses and other documents incidental to the registration
of the shares of Common Stock underlying the Debentures, including any amendment
of  or  supplements  thereto.  Any  filings  submitted via EDGAR will constitute
fulfillment  of  the  Company's  obligation  under  this  Section.

     (h)     Limitation  on  Issuance  of  Shares. If the Company's Common Stock
becomes  listed  on  the  Nasdaq  SmallCap  Market  after  the  issuance  of the
Debenture, the Company may be limited in the number of shares of Common Stock it
may issue by virtue of (A) the number of authorized shares or (B) the applicable
rules  and  regulations  of  the principal securities market on which the Common
Stock  is  listed  or  traded, including, but not necessarily limited to, NASDAQ
Rule  4310(c)(25)(H)(i)  or Rule 4460(i)(1), as may be applicable (collectively,
the  "Cap Regulations").  Without limiting the other provisions thereof; (i) the
Company  will  take  all steps reasonably necessary to be in a position to issue
shares of Common Stock on conversion of the Debentures without violating the Cap
Regulations  and  (ii)  if,  despite taking such steps, the Company still cannot
issue  such  shares  of  Common Stock without violating the Cap Regulations, the
Holder  cannot convert as result of the Cap Regulations (each such Debenture, an
"Unconverted  Debenture")  shall have the right to elect either of the following
remedies:

     (x)  if  permitted  by  the  Cap  Regulations, require the Company to issue
shares of Common Stock in accordance with the Holder's Notice of Conversion at a
conversion  purchase  price  equal  to  the average of the closing bid price per
share  of  Common  Stock  for  any five (5) consecutive Trading Days (subject to
certain  equitable  adjustments for certain events occurring during such period)
during the sixty (60) Trading Days immediately preceding the Conversion Date; or

     (y)  require the Company to redeem each Unconverted Debenture for an amount
(the  "Redemption Amount"), payable in cash, equal to the sum of (i) one hundred
thirty-three  percent  (133%) of the principal of an Unconverted Debenture, plus
(ii)  any  accrued but unpaid interest thereon through and including the date on
which  the  Redemption  Amount  is  paid  to the holder (the "Redemption Date").

     The  Holder of an Unconverted Debenture may elect one of the above remedies
with  respect  to  a  portion of such Unconverted Debenture and the other remedy
with  respect  to  other  portions  of the Unconverted Debenture.  The Debenture
shall  contain  provisions  substantially  consistent with the above terms, with
such additional provisions as may be consented to by the Holder.  The provisions
of  this section are not intended to limit the scope of the provisions otherwise
included  in  the  Debenture.

     (i)     Limitation  on  Amount of Conversion and Ownership. Notwithstanding
anything  to  the  contrary  in  this Debenture, in no event shall the Holder be
entitled  to convert that amount of Debenture, and in no event shall the Company
permit  that  amount of conversion, into that number of shares, which when added
to  the sum of the number of shares of Common Stock beneficially owned, (as such
term  is  defined  under Section 13(d) and Rule 13d-3 of the Securities Exchange
Act  of  1934, as may be amended, (the "1934 Act")), by the Holder, would exceed
4.99%  of  the  number  of  shares of Common Stock outstanding on the Conversion
Date,  as  determined  in  accordance with Rule 13d-1(j) of the 1934 Act. In the
event  that  the  number  of shares of Common Stock outstanding as determined in
accordance  with  Section  13(d)  of the 1934 Act is different on any Conversion
Date  than it was on the Closing Date, then the number of shares of Common Stock
outstanding  on  such  Conversion  Date shall govern for purposes of determining
whether the Holder would be acquiring beneficial ownership of more than 4.99% of
the  number  of  shares  of  Common  Stock  outstanding on such Conversion Date.

     (j)     Legend.  The Holder acknowledges that each certificate representing
the  Debentures,  and  the  Common  Stock  unless  registered  pursuant  to  the
Registration  Rights  Agreement,  shall be stamped or otherwise imprinted with a
legend  substantially  in  the  following  form:

THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  MAY  NOT  BE OFFERED OR SOLD,
TRANSFERRED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  (ii)  TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR
ANY  SIMILAR  RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii)  PURSUANT  TO  AN  AVAILABLE  EXEMPTION  FROM REGISTRATION UNDER SUCH ACT.

     (k)  Prior to conversion of the Debenture, if at any time the conversion of
all  the Debentures and exercise of all the Warrants outstanding would result in
an  insufficient  number of authorized shares of Common Stock being available to
cover all the conversions, then in such event, the Company will move to call and
hold  a shareholder's meeting or have shareholder action with written consent of
the proper number of shareholders within thirty (30) days of such event, or such
greater  period  of  time  if  statutorily  required  or reasonably necessary as
regards  standard brokerage house and/or SEC requirements and/or procedures, for
the  purpose  of authorizing additional shares of Common Stock to facilitate the
conversions.   In such an event management of the Company shall recommend to all
shareholders  to  vote their shares in favor of increasing the authorized number
of  shares  of  Common  Stock.  Management  of the Company shall vote all of its
shares of Common Stock in favor of increasing the number of shares of authorized
Common  Stock  to an amount equal to three hundred percent (300%) of the balance
on  the DebentureThe Company represents and warrants that under no circumstances
will  it  deny  or  prevent  the  Holder's  right  to  convert the Debentures as
permitted  under  the  terms  of this Subscription Agreement or the Registration
Rights  Agreement.  Nothing  in  this  Section shall limit the obligation of the
Company  to  make  the payments set forth in this Section 3.  The Holder, at his
option,  may request the company to authorize and issue additional shares if the
Holder  feels  it  is  necessary for conversions in the future. In the event the
Company's  shareholder's meeting does not result in the necessary authorization,
the  Company  shall redeem the outstanding Debentures for an amount equal to the
sum of the principal of the outstanding Debentures plus accrued interest thereon
multiplied  by  133%.

     Section  3.3     Fractional Shares.  The Company shall not issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
conversion  of  this Debenture.  Instead, the Company shall round up or down, as
the  case  may  be,  to  the  nearest  whole  share.

     Section  3.4     Taxes  on  Conversion.  The  Company  shall  pay  any
documentary,  stamp  or similar issue or transfer tax due on the issue of shares
of  Common  Stock  upon  the  conversion of this Debenture.  However, the Holder
shall  pay  any  such  tax  which is due because the shares are issued in a name
other  than  its  name.

     Section  3.5     Company  to  Reserve Stock.  The Company shall reserve the
number  of  shares  of  Common Stock required pursuant to and upon the terms set
forth  in the Subscription Agreement to permit the conversion of this Debenture.
All  shares of Common Stock which may be issued upon the conversion hereof shall
upon issuance by the Company be validly issued, fully paid and nonassessable and
free  from  all  taxes,  liens and charges with respect to the issuance thereof.

     Section  3.6     Restrictions  on  Sale.  This  Debenture  has  not  been
registered under the Securities Act of 1933, as amended (the "Act") and is being
issued  under  Section  4(2) of the Act and Rule 506 of Regulation D promulgated
under the Act.  This Debenture and the Common Stock issuable upon the conversion
thereof may only be sold pursuant to registration under or an exemption from the
Act.

     Section 3.7     Stock Splits, Combinations and Dividends.  If the shares of
Common  Stock  are  subdivided  or  combined into a greater or smaller number of
shares  of  Common Stock, or if a dividend is paid on the Common Stock in shares
of  Common  Stock, the Conversion Price shall be proportionately reduced in case
of  subdivision  of shares or stock dividend or proportionately increased in the
case  of  combination  of  shares,  in each such case, by the ratio of the total
number  of shares of Common Stock outstanding immediately after such event bears
to  the  total number of shares of Common Stock outstanding immediately prior to
such  event.

Article  4     Mergers

     The  Company shall not consolidate or merge into, or transfer any or all of
its assets to, any person, unless such person assumes in writing the obligations
of  the  Company  under this Debenture and immediately after such transaction no
Event  of  Default  exists.  Any  reference herein to the Company shall refer to
such  surviving  or  transferee  corporation  and the obligations of the Company
shall  terminate  only upon such written assumption of the Company's obligation.
The  Company  shall  make  notice  to  the  Holder  simultaneously  with  the
dissemination  of  a  Merger  to  the  public  markets.

Article  5  Security

     This  Debenture  is  secured  by  both  Security  Agreements (the "Security
Agreements")  between  the Company and the Holder and its affiliates, both dated
February  22,  2006.

Article  6     Defaults  and  Remedies

     Section 6.1     Events of Default.  An "Event of Default" occurs if any one
of  the  following  occur:

     (a)  the  Company  does  not make the Payment of the principal, interest or
other sum due under this Debenture by the Holder's conversion into Common Stock,
within  five (5) business days of the Maturity Date, upon redemption, Conversion
Date  or  otherwise  described  herein;  or,

     (b)  the  Company does not make a Payment in cash for a period of three (3)
business  days  when  due  as  described  in  this  Agreement;  or,

     (c)  any  of  the  Company's representations or warranties contained in the
Transaction  Documents  or  this  Debenture  were false when made or the Company
fails  to comply with any of its other agreements and such failure continues for
a  period  of  five  (5)  business  days;  or,

     (d)  the  Company  pursuant to or within the meaning of any Bankruptcy Law:
(i)  commences  a  voluntary  case;  (ii)  consents to the entry of an order for
relief against it in an involuntary case; (iii) consents to the appointment of a
Custodian  (as hereinafter defined) of it or for all or substantially all of its
property  or (iv) makes a general assignment for the benefit of its creditors or
(v)  a  court  of  competent  jurisdiction  enters  an order or decree under any
Bankruptcy  Law  that:  (A)  is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or substantially all of
its  property  or  (C)  orders  the liquidation of the Company, and the order or
decree  remains  unstayed  and  in  effect  for  sixty  (60)  calendar days; or,

     (e)  the  Company's  Common  Stock  is suspended or no longer listed on any
recognized  exchange  including  electronic  over-the-counter  bulletin  board
("Principal  Market")  for  in  excess  of  three  (3) consecutive Trading Days.
Failure  to  comply  with  the requirements for continued listing on a Principal
Market  for  a period of five (5) trading days; or notification from a Principal
Market  that  the  Company  is  not  in  compliance with the conditions for such
continued  listing  on  such  Principal  Market;  or,

     (f)  the  Company  breaches  any  covenant  or condition of the Transaction
Documents,  and  such breach, if subject to cure, continues for a period of five
(5)  business  days;  or,

     Section 6.2     Remedies.  In the Event of Default, the Holder may elect to
secure  a  portion  of the Company's assets in Pledged Collateral (as defined in
the  Security Agreement).  The Holder may also elect to garnish Revenue from the
Company  in  an  amount  that will repay the Holder on the schedules outlined in
this  Agreement.

     In  the  Event  of  Default,  as outlined in this Agreement, the Holder can
exercise  its  right to increase the Face Amount of the Debenture by ten percent
(10%) as an initial penalty, and for each subsequent Event of Default under this
Agreement.  In addition, the Holder may elect to increase the Face Amount by two
and  one-half  percent (2.5%) per month (pro-rata for partial periods) paid as a
penalty  for liquated damages ("Liquidated Damages").  The Liquated Damages will
be  compounded  daily.  It  is the intention and acknowledgement of both parties
that  the  Liquidated  Damages not be deemed as interest under the terms of this
Agreement.

     The  Company  agrees that the date of consideration for the Debenture shall
remain  the  Issuance  Date stated herein.  The Company shall provide an opinion
letter  from  counsel  within  two  (2)  business days of written request by the
Holder  stating that the date of consideration for the Debenture is the Issuance
Date  and submission of proper Rule 144, promulgated under the Securities Act of
1933,  support  documentation  consisting of Form 144, a broker's representation
letter  and a seller's representation letter.  In the event the Company does not
deliver  the  opinion  letter  within  two business days, the Default Conversion
Price  shall  immediately  decrease by two percent (2%) for each business day an
opinion  letter fails to be delivered.  In the event that counsel to the Company
fails  or  refuses  to  render  an  opinion  as  required to issue the Shares in
accordance  with  this paragraph (either with or without restrictive legends, as
applicable),  then  the  Company irrevocably and expressly authorizes counsel to
the  Holder  to  render  such  opinion and shall authorize the Transfer Agent to
accept  and  to  rely  on  such  opinion  for the purposes of issuing the Shares
(which  is  attached  as  Exhibit  E  to  the Subscription Agreement between the
Company  and  the  Holder  of this date).  Any costs incurred by Holder for such
opinion  letter  shall  be  added  to  the  Face  Amount  of  the  Debenture.

     Section  6.3     Acceleration.  If  an  Event of Default occurs, the Holder
hereof  by  notice  to the Company may declare the remaining principal amount of
this  Debenture,  together with all accrued interest and any liquidated damages,
to  be  due  and  payable.

     Section 6.4     Seniority. No indebtedness of the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or upon
liquidation  or dissolution or otherwise.  And, the Company warrants that it has
taken  all necessary steps to subordinate its other obligations to the rights of
the  Holder  hereunder.

     Section  6.5     Cost  of  Collections.  If an Event of Default occurs, the
Company  shall  pay  the Holder hereof reasonable costs of collection, including
reasonable  attorney's  fees.

Article  7     Registered  Debentures

     Section  7.1     Record  Ownership.  The  Company,  or  its attorney, shall
maintain  a  register  of  the Holder of the Debentures (the "Register") showing
their  names  and  addresses  and  the  serial  numbers and principal amounts of
Debentures  issued  to  them.  The  Register  may  be  maintained in electronic,
magnetic  or other computerized form.  The Company may treat the person named as
the  Holder  of  this  Debenture  in  the  Register  as  the  sole owner of this
Debenture.   The  Holder of this Debenture is the person exclusively entitled to
receive  payments  of  interest  on  this  Debenture, receive notifications with
respect  to  this Debenture, convert it into Common Stock and otherwise exercise
all  of  the  rights  and  powers  as  the  absolute  owner  hereof.

     Worn  or  Lost  Debentures.  If  this  Debenture  becomes  worn, defaced or
mutilated but is still substantially intact and recognizable, the Company or its
agent  may  issue a new Debenture in lieu hereof upon its surrender.   Where the
Holder  of  this Debenture claims that the Debenture has been lost, destroyed or
wrongfully  taken,  the  Company  shall  issue  a  new Debenture in place of the
Debenture  if  the  Holder  so  requests  by  written  notice  to  the  Company.

Article  8     Notice.

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Debenture must be in writing and
will  be  deemed  to  have  been  delivered  (i)  upon  receipt,  when delivered
personally;  (ii)  upon receipt, when sent by facsimile (provided a confirmation
of  transmission is mechanically or electronically generated and kept on file by
the  sending  party);  or  (iii)  one  (1)  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If  to  the  Company:

Laurie  Phillips
Xtreme  Companies,  Inc.
300  Westlink  Dr
Washington,  MO  36090
Telephone:  (636)  390-9000
Facsimile:  (636)  390-2556

If  to  the  Investor:

Douglas  Leighton
Dutchess  Capital  Management
50  Commonwealth  Ave,  Suite  2
Boston,  MA  02116
Telephone:  617-301-4702
Facsimile:  617-249-0947

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.


Article  9     Time

     Where  this  Note  authorizes  or  requires  the  payment  of  money or the
performance of a condition or obligation on a Saturday or Sunday or a holiday on
which  the  United  States  Stock Markets ("US Markets") are closed ("Holiday"),
such  payment  shall  be  made  or condition or obligation performed on the last
business day preceding such Saturday, Sunday or Holiday.  A "business day" shall
mean  a  day  on  which  the  US  Markets are open for a full day or half day of
trading.

Article  10     No  Assignment

     This  Debenture and the obligation hereunder shall not be assignable by the
Company  or  the  Holder.

Article  11     Rules  of  Construction.

     In  this  Debenture,  unless  the  context otherwise requires, words in the
singular  number include the plural, and in the plural include the singular, and
words  of the masculine gender include the feminine and the neuter, and when the
sense  so  indicates,  words  of the neuter gender may refer to any gender.  The
numbers  and  titles  of  sections  contained  in the Debenture are inserted for
convenience  of  reference  only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof.  Wherever,
in  this  Debenture, a determination of the Company is required or allowed, such
determination  shall  be  made  by  a  majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the  Company  and  the  Holder  of  this  Debenture.


Article  12     Governing  Law

     The validity, terms, performance and enforcement of this Debenture shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely in the Commonwealth of
Massachusetts.

Article  13     Disputes  Under  Agreement

     All  disputes  arising  under  this  agreement  shall  be  governed  by and
interpreted  in  accordance  with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws.  The parties to this agreement
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA").  The  arbitrator  shall  be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an  attorney  admitted to practice law in the Commonwealth of Massachusetts.  No
party  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.   Nothing  in this section shall limit the Holder's
right  to  obtain  an  injunction for a breach of this Agreement from a court of
law.

Article  14  Redemption

     The  Holder  shall  have  the  right  to be redeemed from the Debenture, in
whole  or  in part, at a price equal to one hundred and twenty percent (120%) of
the  outstanding  principal  amount of the Debenture, including accrued interest
(and  penalties  if  applicable).  Any  Payments, as defined in Article 2 above,
shall  apply  to  the  Redemption  Amount.

Article  15     Use  of  Proceeds

     For  general  corporate  purposes  and  working  capital.

Article  16     Structuring  and  Administration  Expense

     The Company agrees to pay for related expenses associated with the proposed
transaction  of  $10,000.  This  amount  shall cover, but is not limited to, the
following:  due  diligence  expenses, document creation expenses, closing costs,
and  transaction  administration  expenses.  This  shall  be  deducted  from the
Closing.

Article  17     Waiver

The  Holder's  delay or failure at any time or times hereafter to require strict
performance  by  the  Company of any undertakings, agreements or covenants shall
not  waive,  affect, or diminish any right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

Article  18     Integration

This  Debenture  is  the FINAL AGREEMENT between the Company and the Holder with
respect  to  the  terms  and conditions set forth herein, and, the terms of this
Debenture  may  not  be  contradicted  by evidence of prior, contemporaneous, or
subsequent  oral  agreements of the Parties.  The execution and delivery of this
Debenture  shall  not alter the prior written agreements between the Company and
the  Holder.

Article  19     Failure  to  Meet  Obligations

           The  Company  acknowledges that its failure to timely meet any of its
obligations  hereunder,  including,  but without limitations, its obligations to
make  Payments,  deliver  shares  and,  as  necessary,  to register and maintain
sufficient  number  of  Shares, will cause the Holder to suffer irreparable harm
and,  that  the  actual  damage  to  the  Holder will be difficult to ascertain.
Accordingly,  the  parties  agree  that  it  is  appropriate  to include in this
Debenture a provision for liquidated damages.  The parties acknowledge and agree
that  the  liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form  and amount of such liquidated damages are reasonable and do not constitute
a penalty.  The payment of liquidated damages shall not relieve the Company from
its  obligations  to  deliver  the  Common  Stock  pursuant to the terms of this
Debenture.

Article  20     Registration

     The  Company  shall  file  a registration statement with the SEC, within 45
days  following  a  written  request by the Holder ("Filing Date"), covering the
Debenture.  The  number of shares of Stock registered shall be equivalent to the
sum  of:  1) the Face Amount divided by the Conversion Price. The Company agrees
that  if  such  registration  statement has not been submitted to the SEC by the
Filing  Date,  the Conversion Price will initially drop ten percent (10%) and an
additional  ten  percent  (10%) for every fifteen (15) day period thereafter the
Company  fails to file the Registration Statement.  The Company also agrees that
if  the  Filing  Date  exceeds 45 days or the date the registration statement is
declared  effective  (the "Effective Date") exceeds 90 days from the Filing Date
("Penalty Date" collectively the "Penalty Dates"), a penalty of two percent (2%)
per  month, of the Face Amount of the Debenture, shall accrue for each month the
Filing  Date  and/or  the Effective Date exceeds the Penalty Date, pro-rated for
partial  periods.  The  Company  agrees not to include any other registration to
this  statement  without  the  Investor's  consent.

                                      *.*.*


<PAGE>

     IN  WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date  first  written  above  and  duly  authorized  to  sign  on  behalf  of:

                         XTREME  COMPANIES,  INC.
                         ------------------------


   By:  /s/Laurie  A.  Phillips
        -----------------------
 Name:  Laurie  Phillips
Title:  Chief  Executive  Officer


                              DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  140L.P.
                              BY  ITS  GENERAL  PARTNER  DUTCHESS
                              CAPITAL  MANAGEMENT,  LLC


   By:  /s/Douglas  H.  Leighton
        ------------------------
 Name:  Douglas  H.  Leighton
Title:  A  Managing  Member

<PAGE>

                                    Exhibit A

                              NOTICE OF CONVERSION
                              --------------------

     (To be Executed by the Registered Owner in order to Convert Debenture)
TO  Xtreme  Companies,  Inc.,  Inc.

     The  undersigned  hereby  irrevocably  elects,  as  of ________________, to
convert  $________________  of  its convertible debenture (the "Debenture") into
Common  Stock  of  Xtreme  Companies, Inc., Inc.(the "Company") according to the
                   -----------------------------
conditions  set  forth  in  the  Debenture  issued  by  the  Company.

Date  of  Conversion________________________________________________


Applicable  Conversion  Price________________________________________


Number  of  Debentures  Issuable  upon  this  Conversion_______________________


Name(Print)___________Dutchess  Private  EquitiesFund,  II, LP _________________
                      ----------------------------------------

Address______________50  Commonwealth  Ave,  Boston,  MA  02116_____________
                     ------------------------------------------


Phone_____617-301-4700_____________  Fax________617-249-0947___________
          -------------------------             ------------





                    By:_______________________________________
                                     Douglas  Leighton